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What Is an “Oracle” in the Context of DeFi Derivatives?

An oracle is a third-party service that securely and reliably brings external, real-world data, such as the price of an underlying asset like Bitcoin, onto a blockchain. In DeFi derivatives, the oracle is critical for determining the contract's settlement price, margin calls, and liquidations.

The security and integrity of the oracle are paramount.

How Does an Oracle Service Ensure Data Integrity in DeFi?
How Do Oracles Feed External Price Data to Smart Contracts?
How Does an ‘Oracle’ Feed Data to a Smart Contract?
What Is the Difference between a “First-Party” and a “Third-Party” Oracle?